Sales Tax State Activity Update -September 2004

Shredding Services Exempt in Kansas

A taxpayer requested that the Kansas Department of Revenue rule on whether the shredding services it offered was subject to sales tax.

The Office of Policy and Research ruled the shredding service was similar to trash hauling which is not subject to tax. It was also ruled the service was exempt, whether it was performed onsite or offsite.

The taxpayer also wanted to know if the shredding and bailing qualified for the exemption allowed by K.S.A. 79-3606(kk), which is for machinery and equipment that is used in an integrated production operation. K.S.A. 79-3606(3) (L) extends the exemption to machinery and equipment used to treat, transport, or store waste or other byproducts of the production operation at the plant or facility.

Since the service was held out as a document destruction service, and the equipment is not being used to treat waste or byproducts from production operations at an integrated production facility, the shredding and bailing equipment was ruled taxable.

The Letter Ruling is available at: http://www.ksrevenue.org/pilrd.htm

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